On Monday the S&P/ASX 200 Index (ASX: XJO) was in sensational form and surged materially higher. The benchmark index jumped 2.6% to 5,941.6 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to rise again.

The Australian share market looks set to continue its positive run on Tuesday. According to the latest SPI futures, the ASX 200 is expected to rise 29 points or 0.5% at the open. This follows a strong start to the week on Wall Street, which saw the Dow Jones rise 1.7%, the S&P 500 climb 1.8%, and the Nasdaq storm 2.25% higher. News that President Trump is being discharged from hospital helped drive markets higher.

Reserve Bank meeting.

This afternoon the Reserve Bank will hold its October meeting and make a decision on the cash rate. According to the latest cash rate futures, the market is currently pricing in a 67% probability of a rate cut at the meeting. A number of economists are tipping the Reserve Bank to make a partial cut from 0.25% down to 0.1%.

Oil prices rebound strongly.

Energy shares such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could be on the rise today after oil prices rebounded strongly. According to Bloomberg, the WTI crude oil price is up 6.2% to US$39.37 a barrel and the Brent crude oil price is up 5.6% to US$41.48 a barrel. Stimulus hopes helped drive oil prices higher.

Gold price rises.

The shares of Newcrest Mining Limited (ASX: NCM) and St Barbara Ltd (ASX: SBM) will be on watch today after the gold price pushed higher. According to CNBC, the spot gold price has climbed 0.55% to US$1,918.20 an ounce. This was driven by a combination of COVID-19 stimulus hopes and a weakening U.S. dollar.

Federal Budget.

Tonight Josh Frydenberg will be handing down the Federal Budget. The government will be making this a budget focused on creating jobs and driving Australia out of its recession. One major policy will be the bringing forward of personal tax cuts from 2022 and backdated to July. Investors may want to keep an eye out for further policy announcements that may be drip fed to the media during the day. 

More reading

• Altium (ASX:ALU) updates market on restructure
• The latest ASX small cap buy ideas from leading brokers
• ASX 200 jumps 2.6%, big 4 banks surge
• Top broker tipping turnaround in ASX big bank profit margins
• Ignore the noise and focus on these ASX shares instead

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Later today the Reserve Bank of Australia will meet to discuss the cash rate.

While a full rate cut to zero seems unlikely, a number of economists believe a partial cut down to 0.1% from 0.25% could happen.

This would be great news for borrowers, but certainly not for savers and income investors who will have to contend with even lower interest rates.

Luckily for the latter group, the Australian share market is home to a large number of dividend shares that can help you beat these low rates.

Two that I would buy are listed below:

Dicker Data Ltd (ASX: DDR)

The first ASX dividend share I would buy is Dicker Data. It is a wholesale distributor of computer hardware and software. Due to an increasing number of vendor relationships and robust demand for information technology products, Dicker Data has been growing its earnings and dividends at a strong rate over the last five years. This has continued even during the pandemic thanks to the work from home initiative and the shift to the cloud. Based on the current Dicker Data share price, I estimate that it offers a fully franked forward 4.55% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

I think this telco giant would be a great option for income investors due to its improving outlook. This is due to its T22 strategy, 5G internet, and the easing of the NBN headwind. Combined, I believe a return to earnings and dividend growth could be on the cards in the coming years. In the meantime, I believe its 16 cents per share dividend is sustainable if it shifts its dividend policy to be based on free cash flow. Based on the latest Telstra share price, investors would receive a very generous fully franked 5.65% dividend yield if it does sustain its current payout in FY 2021.

More reading

• How to generate a passive income of $50,000 with ASX shares
• Beat the RBA rate cuts with these ASX dividend shares
• Meet the ASX 200 stock with a dividend yield that’ll hit ~14% in FY22
• The Telstra (ASX:TLS) share price is at a new 52-week low
• 2 high yield ASX dividend shares to solve your income needs

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Afterpay vs Zip? From both a consumer and investor standpoint, I see this question come up online time and time again.

Founded in 2017 in Melbourne, Afterpay Ltd (ASX: APT) is arguably the most well-known buy now, pay later (BNPL) brand in Australia. You have to hand it to the team though. They have their marketing stickers in almost every shop window and on every ecommerce website. The Afterpay business model is essentially short-term, interest-free lending. Similar to a lay-by type deal, but the consumer gets the product instantly.

Zip Co Ltd (ASX: Z1P) was founded in 2009 and just like Afterpay, it is well-known in the BNPL sector. It has a slightly different business model to Afterpay, offering not only BNPL services, but also personal finance management/education through its Pocketbook app. Additionally, Zip offers unsecured loans in different capacities.

Operations and locations

Afterpay has a broad reach, operating in Australia, New Zealand, the United States, Canada and the United Kingdom. It operates through a variety of brands such as Afterpay ANZ, Afterpay US, Clearpay and Pay Now. In August 2020, Afterpay signed off on a deal to acquire Spanish fintech company Pagantis, with the goal to expand its BNPL reach throughout Europe.

Zip is also a major international player, operating in Australia, the United Kingdom, the United Stated, New Zealand and South Africa. The company has multiple brands, including ZIP AU, Zip Global and Spotcap. It offers users digital wallets called either Zip Pay or Zip Money. They are essentially just for different sized purchases.

Afterpay has much more of the European market (after the recent acquisition) and also Canada. Zip has South Africa. In the question of Afterpay vs Zip, aside from those locations, they share a lot of geography.

Financial reports 

Afterpay’s FY20 results really showed it to be a market leader in the BNPL sector. 

• Almost 10 million active users
• 55,000+ partners/merchants
• Revenue of $519.2 million, up 97%
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $44.4 million, up 73%

Zip Co’s FY20 results were also very strong, but clearly show it to be a much smaller player.

• More than 2 million active users
• Almost 25,000 partners/merchants
• Revenue of $161 million, up 91%
• EBITDA of $3.5 million

Afterpay vs Zip? Afterpay is clearly the bigger player here.

Share price performance

Year to date, Afterpay shares are up around 170%, with the price rising from $29.15 to around $79.52.

Since its initial public offering (IPO), Afterpay shares are up a staggering 2,887%!

Zip shares have risen 91% in 2020, with prices moving from $3.53 to $6.76.

IPO-wise, Zip has been listed for a lot longer than Afterpay. The Zip share price has risen 2,599% approximately.

Looking at the performance, Afterpay shares have offered investors higher returns in 2020 and also since inception. 

Afterpay vs Zip key takeaways

Afterpay is a bigger player with more market share, a European and Canadian audience and higher returns for investors. For consumers however, Zip offers more options and this could be a key difference over time. Zip also has no scheduled repayments (you determine them within the account), so this can be a competitive advantage over Afterpay.

Even though Afterpay seems to be a clear winner for investors, it still has a lot of competition in general. Also, in the BNPL sector, companies are something only 1 good partnership away from securing huge amounts of market share. As BNPL is such a hot sector this year, it could be worth considering hedging bets and securing shares in both.

More reading

• You could become very wealthy by investing $1,000 into these ASX shares
• 5 things to watch on the ASX 200 on Monday
• This ASX share is my top contrarian play right now
• These were the best performing shares on the ASX 200 last week
• These ASX growth shares could be strong buys in October

glennleese has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When COVID-19 arrived uninvited on Australia’s shores on 25 January, few could have imagined the massive disruptions that soon followed.

Among the biggest of those disruptions was a rapid shift towards shopping and working from home.

The shopping from home shift saw the share prices of ASX-listed brick and mortar retailers – and their landlords – fall hard. Most of them have yet to recover their January share price levels.

On the flip side, a handful of shrewd ASX-listed online retailers not only recovered from the viral selloff in February and March, but have gone on to post hefty gains.

The share price winners and losers

Take online retail darling Kogan.com Ltd (ASX: KGN), for example. Despite falling more than 52% earlier in the year, Kogan’s share price is up 173% since 2 January.

Most of those gains have come as the company’s 200 some staff work from home. Like the majority of businesses across Australia, Kogan’s offices have not been able to accommodate their normal occupancy in these days of social distancing.

But now even Kogan’s tech savvy management is eager to open the office doors and get its staff back in for face to face engagement.

As founder Ruslan Kogan said in the Australian Financial Review:

I’m craving to get back into the office and I know that the majority of our team also can’t wait to get back.

I think as humans we have a tendency to extrapolate the current environment when predicting the future so lots of people are saying that offices will never be the same. I think it’s the wrong view. The same happens when your poor football team wins two matches in a row and all of a sudden you think they’re a chance at the premiership.

The office environment is currently undergoing massive disruption and we’re not permitted to use our offices. I’m sure once it’s safe to do so, things will return to just how they were very quickly.

Office shares emerging from massive disruption

Like brick and mortar retailers, most office shares are still posting significant losses for 2020. But if Kogan is correct and the office market returns to how it was very quickly, then the share price gains should come just as fast.

One way to gain exposure to a basket of quality office assets is with the Centuria Office REIT (ASX: COF), which makes up part of the S&P/ASX 300 Index (ASX: XKO).

Real estate investment trusts (REITs) trade on the ASX just like any other share.

Centuria holds 23 quality office assets valued at $2.1 billion as at 30 June. Most of the assets are located in or near Australia’s major city centres, close to transport. The REIT pays an 8.6% annual dividend yield, unfranked.

Centuria was a strong performer in 2019, with the share price gaining 33% from February 2019 through to February 2020. But after office buildings largely closed in the wake of the pandemic, the share price fell 55% from 21 February through to 23 March. It has since regained 40%.

Year-to-date, the Centuria share price is still down 31%. As the work from home shift reverses and workers return to the office, this could prove an attractive entry point.

More reading

• 4 stellar ASX growth shares to buy right now
• Centuria Capital’s fund managers’ insights on A-REITs and unlisted property funds
• 3 ASX tech shares to buy and hold for the next decade
• Meet the ASX 200 stock with a dividend yield that’ll hit ~14% in FY22
• How to generate $50k a year from ASX dividends

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Altium Limited (ASX: ALU) advised the market of a restructure this afternoon, sending the Altium share price rocketing up to $35.76, before falling back to intra-day levels. The Altium share price was trading relatively flat, up 0.43% to $35.23 at close of trade.

This compares to the S&P/ASX 200 Index (ASX: XJO) which was up 2.6% at 5,941 points.

Expansion and restructure

Altium advised it was expanding its leadership and organisation capacity to drive growth and further invest in its new cloud platform, Altium 365. The company’s successful launch and strong early adoption of its product created the opportunity for structural review.

In the restructure, Altium will separate its cloud operations from its software business. The company will also focus on its growing market opportunity and expansion into the broader electronics ecosystem.

Altium CEO Aram Mirkazemi said the launch of Altium 365 marked a significant turning-point in the company’s journey. He said:

We are deep in execution mode toward our dominance and transformation goals. This has led to the creation of a new organisational structure to support us on this journey and to drive the high performance required to achieve our goals. I refer to this as Altium’s Netflix moment, which is commonly referred to in the high-tech industry as a hard pivot to the cloud.

Under the restructure, the cloud and software departments will have their own leadership teams and roadmaps. This will allow both divisions to develop at their own pace to its product and go-to-market processes. The separation of high-volume sales from high-touch sales is expected to support Altium’s goal to reach 100,000 subscribers by 2025.

Leadership changes

Altium’s executive director Sergey Kostinsky was appointed president in the restructure. He will focus on executing business operations, with emphasis on the rapid deployment and adoption of Altium 365.

Altium chair Sam Weiss was upbeat with Mr Kostinsky’s new role, saying:

We are excited to see Sergey appointed to the new role of president at Altium. Sergey has been the driving force behind Altium’s technology development that underpins the company’s bid for market dominance and to transform the electronics industry.

Under Sergey’s leadership, Altium’s PCB design tools have become world-class and Altium 365 is set to revolutionise the way that electronic products are designed and manufactured. We are confident that Sergey will bring his unique focus on discipline and value to all of Altium’s product development and go-to-market domains to deliver winning outcomes.

Furthermore, Altium CFO Joe Bedewi will assume the new role of EVP corporate development and external affairs. This role was created to capitalise on the growing market opportunity for Altium 365 and the wider electronics industry.

The vacant CFO role will be filled by Martin Ive, who has led the company’s global finance function for more than 15 years. Mr Ive has provided strong business support to Altium’s sales teams, while being a key figure in strategic and operational decision-making. As CFO, Mr Ive will work closely with Mr Kostinsky to push Altium’s performance.

More reading

• The latest ASX small cap buy ideas from leading brokers
• ASX 200 jumps 2.6%, big 4 banks surge
• Top broker tipping turnaround in ASX big bank profit margins
• 2 outstanding ASX tech shares to buy for the long term
• Ignore the noise and focus on these ASX shares instead

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Risk appetite has come roaring back on Monday and these ASX small caps are outperforming as they are listed as the latest broker buy ideas.

The S&P/ASX SMALL ORDINARIES (Index: ^AXSO) and S&P/ASX 200 Index (Index:^AXJO) rallied around 2.4% each at the close.

If the rebound is sustained, ASX small caps could pull ahead as these higher risk propositions tend to perform better when fear turns to greed.

ASX small cap that’s ripe for the picking

There are two on the Small Ordinaries that stand out today. The first is the Costa Group Holdings Ltd (ASX: CGC) share price, which gained 3.3% to $3.47 today.

UBS reiterated its “buy” recommendation on the fruit and mushroom grower after it noted wholesale prices for most of its key products have improved.

Sweet outlook puts Costa on “buy” list

“Overall, wholesale trends through 3QCY20 were strong with prices (ex-Blueberries) up 19-34% y/y, accelerating vs. 2QCY20,” said UBS.

“Mushrooms have been particularly strong, with progressive improvement since July despite additional capacity.

“While the Blueberry category was weak during Jul/Aug, a significant improvement during Sep-20 resulted in ~flat y/y prices during 3Q.”

The other worry about the lack of pickers during COVID-19 travel restrictions. But the broker believes this isn’t an issue, in part due to Costa’s geographically diverse operations.

UBS’ 12-month price target on Costa is $3.55 a share.

Fallen far enough

Meanwhile, the Integrated Research Limited (ASX: IRI) share price surged 4.4% to $3.60 after Bell Potter upgraded the stock.

The big drop in the share price of the IT services group since the August reporting season meant there is a 20% upside including dividends.

The broker is forecasting earnings per share growth of 10% for the current financial year, 11% for FY22 and 15% for FY23.

Double-digit earnings growth

“The lower forecast growth in FY21 is due to the release of new SaaS and hybrid products this half which are only expected to start contributing in 2HFY21,” said the broker.

“There is, however, a lack of short term catalysts for the stock – at least which we can see – and we also only expect modest growth in 1HFY21 with the anticipated skew in earnings towards 2HFY21.

“But we do expect solid growth for the full year result which in our view supports the upgrade in recommendation.”

Bell Potter lifted its rating on the stock to “buy” from “hold” with a 12-month price target of $4.25 a share.

More reading

• Altium (ASX:ALU) updates market on restructure
• ASX 200 jumps 2.6%, big 4 banks surge
• Top broker tipping turnaround in ASX big bank profit margins
• Ignore the noise and focus on these ASX shares instead
• ASX 200 up 2.3%: Big four banks charge higher, Qantas soars, energy shares jump

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Integrated Research Limited. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) went up 2.6% today to 5,942 points.

If the ASX fell last week because of President Trump’s COVID-19 diagnosis, then it may have reversed that negative sentiment with a prediction that he could leave hospital as early as Monday.

Tax cuts

The ASX may be getting a bit of a boost today after more of the upcoming federal budget was reported by media.

Tax cuts will reportedly be backdated to 1 July 2020. The tax first bracket that gets taxed (with a 19% rate) will be extended to $45,000 (up from $37,000) and earners above $90,000 will benefit with the 37% tax rate changed to start at $120,000 rather than $90,000.

Plenty of ‘Australian economy’ ASX 200 shares went up today.

The Commonwealth Bank of Australia (ASX: CBA) share price grew 3.6%, the Westpac Banking Corp (ASX: WBC) share price rose 4.4%, the Australia and New Zealand Banking Group (ASX: ANZ) share price rose 4.2% and the National Australia Bank Ltd (ASX: NAB) share price grew 4%.

In other movements, the biggest gain today came from Mesoblast Limited (ASX: MSB), its share price jumped 11.6%. According to the ASX, the worst performer was the Viva Energy Group Ltd (ASX: VEA) share price which dropped 12.1%.

Altium Limited (ASX: ALU)

The ASX 200 software business announced today that it’s expanding its leadership and organisational capacity to improve performance and invest more into Altium 365.

Altium said that the successful launch and the strong early adoption of Altium 365 has created the opportunity to pivot Altium’s leadership and organisation structure towards the cloud. It’s separating its cloud operations from its software business and will focus on growing its market opportunity and expansion into the broader electronics ecosystems.

Under the new organisation structure, the ‘cloud’ and ‘software’ sections will each have their own leadership and organisational roadmap. It will allow the cloud business to develop at a different cadence and to form a “SaaS-like organisational structure around its product and go-to-market processes.”

The company said that another benefit would be the separation of high-volume sales from high-touch sales for its journey to market leadership.

Altium has appointed executive director Sergey Kostinsky to the role of president. He will be focused on driving high performance of operations with an emphasis on developing and adopting Altium 365.

Joe Bedewi has stepped down as Altium CFO in order to take on the new role of EVP corporate development and external affairs. This role has been created to capitalise on the Altium 365 market opportunity and the interest in it from the electronics industry.

Altium has appointed Mr Martin Ive as the new CFO, who has led the ASX 200 share’s global finance function for over 15 years.

Altium CEO Mr Aram Mirkazemi said: “The launch of Altium 365 marks a significant turning-point in Altium’s journey. We are in deep execution mode toward our dominance and transformation goals. This has led to the creation of a new organisational structure to support us on this journey and to drive the high performance required to achieve our goals. I refer to this as Altium’s Netflix Moment, which is commonly referred to in the high-tech industry as a hard pivot to the cloud.”

The Altium share price rose 0.4% today.

McMillan Shakespeare Limited (ASX: MMS)

The McMillan Shakespeare share price went up after announcing that the class action has been settled.

The class action related to a warranty product business which McMillan Shakespeare acquired in 2015. A significant portion of the relevant period that the claim was when the business wasn’t actually owned by McMillan Shakespeare.

The company said that the parties have reached agreement to settle the matter with no admission of liability. The agreement is subject to the approval of the Australian federal court.

McMillan Shakespeare provided a net charge of approximately $2 million plus legal costs in its statutory FY20 result. Management said this would be sufficient to deal with the agreed settlement.

The McMillan Shakespeare share price grew around 4.75%.

More reading

• Top broker tipping turnaround in ASX big bank profit margins
• Why the Mesoblast (ASX:MSB) share price jumped 14% higher today
• 2 outstanding ASX tech shares to buy for the long term
• Why the Viva Energy (ASX:VEA) share price crashed 14% lower today
• Why today’s NAB (ASX:NAB) share price gains could be just the beginning

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I think that investing in ASX shares is a great idea if you’re wondering where to start with $500.

You don’t need $50,000 to start investing in shares. You can start with $1,000, or even half that amount. It also costs very little to do a transaction. Buying (or selling) a property usually costs many thousands of dollars.

But which share should you buy? There are lots of different things you can invest in. These days one of the best ways to get started is with an exchange-traded fund (ETF) which allows you to invest in lots of different shares through a single investment.  

But the ASX share that I’m going to tell you about in this article is a listed investment company (LIC).

A LIC is somewhat similar to an ETF. Most LICs usually provide a diversified portfolio of shares, just like an ETF. However, LICs don’t just follow an index – the portfolios are constructed by managers. Some of those managers can outperform the index over the long-term (and plenty don’t).

Here’s my ideas for $500:

Future Generation Investment Company Ltd (ASX: FGX)

As I said, this is a LIC. But there are a few key differences.

The ASX share doesn’t charge any management fees or performance fees. Indeed, it hardly has any costs at all because of its philanthropic nature. It donates 1% of its net assets to youth charities each year. That’s where the ‘Future Generation’ part of the name comes in.

It doesn’t invest in individual businesses like a normal LIC does. Instead, Future Generation is invested in around 20 funds of different fund managers that invest in ASX share. The managers that it’s invested in include: Bennelong, Paradice, Regal, Eley Griffiths and Wilson Asset Management. The fund managers I mentioned represent almost half of Future Generation’s overall portfolio.

Each of those funds represent a portfolio shares, which could mean Future Generation may be invested in hundreds of different ASX shares. I think that’s great diversification. It probably provides better diversification than an ETF like BetaShares Australia 200 ETF (ASX: A200).

Performance

When you look at the latest performance update from 31 August 2020, Future Generation shows outperformance of the S&P/ASX All Ordinaries Accumulation Index over the past month, six months, year, three years, five years and since inception in September 2014.

Indeed, since inception the Future Generation gross portfolio return has beaten the index by an average of 2.6% per annum.

Good diversification and outperformance is a nice combination.

Dividend

LICs can choose to pay out a dividend from its investment performance. Future Generation aims to pay out a slightly higher dividend each year, if the profit reserve allows.

The ASX share currently has an annualised dividend of 5.2 cents per share. That amounts to a grossed-up dividend yield of 6.5% at the current Future Generation share price.

Is the ASX share a good buy today?

One of the most important things to know about LICs is that they can trade at discounts or premiums to their underlying asset value. In other words, sometimes you can buy $0.90 of assets for $1 of shares. Or sometimes you have to pay $1.10 for $1 of assets.

At the time of writing Future Generation has a share price of $1.14. This compares to pre-tax net tangible assets (NTA) of $1.2517 per share. That means it’s trading at a discount of 9% to August’s NTA. The NTA may have grown since then.

When you consider the diversification, the outperformance, the dividend yield and the NTA discount, I think Future Generation is a great ASX share investment for $500 right now.

More reading

• How to create a yearly income of $65,000 in dividends
• 3 LICs with high dividend yields of over 6.5%
• 3 star ASX income shares for 2021
• How to generate $1,000 a month in dividends

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Following a stellar performance in 2019, which saw the Image Resources NL (ASX: IMA) share price gain 108% in only 12 months, Image Resources’ share price has been far choppier in 2020.

Like most every company on the ASX, Image Resources share price was savaged by the COVID-19 panic selling earlier this year, falling 45% from 24 February through to 23 March. From there it gained 75% through to 18 September before again sliding lower.

Year-to-date the share price is down 30% despite today’s strong performance, which saw shares trading 9% higher in mid-afternoon before giving up some of those gains to be 6% higher at time of writing.

What does Image Resources do?

Image Resources is a mining company primarily focused on mineral sands. The company operates an open-cut mine and ore processing facility at its 100%-owned Boonanarring Project, one of the highest-grade zircon-rich mineral sands projects in Australia. Just 80 kilometres north of Perth, the mine is well serviced by existing infrastructure.

Image Resources achieved profitability in the first quarter of 2019 and was cash flow positive in the second quarter of 2019. It is now at steady state production.

Image Resources has a market cap of $162 million.

Why is the Image Resources share price soaring higher today?

After closing on Friday at 16 cents per share, Image Resource’s shares are trading at 18 cents this afternoon.

Aside from a potential lift from the broader rise of the All Ordinaries Index (ASX: XAO), up 2.1% in intraday trading, Image Resources’ share price looks to have gained a boost from the company’s share buy back announcement to the ASX this morning.

The shares in question, just over 495,000 of them, had been issued to employees as part of the company’s Employee Share Plan (ESP). Image Resources noted that:

Some of those employees have ceased employment with the company and the loans made to the employees to fund the issue of the shares became repayable on the cessation of employment. In accordance with the terms of the ESP, the board has determined that the company will buy back and cancel the relevant shares, with the proceeds applied to offset the loans.

The company is offering 26.7 cents per share, considerably higher than the current share price of 18 cents.

More reading

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX bank stocks are on fire today! And a prediction by JPMorgan that their profit margins could improve will give investors an extra reason to get excited.

Growing optimism on news of US President Donald Trump’s improving COVID-19 condition is lifting sentiment.

The S&P/ASX 200 Index (Index:^AXJO) rallied 2.4% in after lunch trade but ASX banks are outperforming.

ASX big banks outperforming

The National Australia Bank Ltd. (ASX: NAB) share price, Westpac Banking Corp (ASX: WBC) share price and Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price are up around 3.7% each.

The Commonwealth Bank of Australia (ASX: CBA) share price is lagging its peers but its 2.7% jump still puts it ahead of the broader market.

ASX bank stocks’ margin outlook improving

JPMorgan delivered extra good news for the big four’s net interest margin (NIM) outlook. Investors have been keenly watching this key profitability measure as bank margins have been under pressure from falling interest rates.

It doesn’t help that the Reserve Bank of Australia is tipped to cut the cash rate again in November to a record low of just 0.1%.

NIM is the difference between the interest banks have to pay for its funds and the interest it can charge borrowers.

One of the biggest profit levers

But at least for September, funding costs have eased for the banks and JPMorgan believes this remains one of the best profit levers for the sector.

“Over the last six months, spreads on savings products and TDs [term deposits] have improved by 38ps and 53bps, respectively,” said the broker.

“We estimate this should provide a meaningful tailwind of 3-6bps [basis points] to major bank 1H21 NIMs.”

Low expectations are a saving grace

This equates to around a 3% increase for the big four. This may not sound like much, but any NIM expansion will be warmly welcomed by investors.

This is because expectations are set low for banks, which have been underperforming the market. The fallout from COVID-19 on jobs and the property market have hammered sentiment towards our biggest mortgage lenders.

Even with today’s big bounce, there’s little good news priced into the sector. Also, I believe banks stocks are underheld by fund managers.

Any excuse to turn positive on banks will trigger a big rally.

Big banks have an upper hand

But banks aren’t out of the woods just yet. JPMorgan believes competition for borrowers is heating up with second-tier lenders cutting rates to win business.

On the other hand, the big banks are better placed to win any war of attrition. The big boys have a distinct advantage over their smaller rivals in securing cheaper funding.

More reading

• Why today’s NAB (ASX:NAB) share price gains could be just the beginning
• Ignore the noise and focus on these ASX shares instead
• ASX 200 up 2.3%: Big four banks charge higher, Qantas soars, energy shares jump
• Why Costa, Qantas, Santos, & Westpac shares are storming higher today
• Could industrial REITs be the best ASX shares to buy for dividends?

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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